Betting on politics: the next Tory leader

The odds on Jacob Rees-Mogg becoming the next Tory leader are narrowing, says Matthew Partridge.


The odds are narrowing on Jacob Rees-Mogg
(Image credit: 2016 Getty Images)

Jacob Rees-Mogg has been making waves in the betting markets. Indeed, the Betfair digital odds on him being the next permanent Tory leader are now only 9.00, equivalent to an 11% chance.

This puts him in third place, behind only Brexit Secretary David Davis (5.5) and Chancellor Phillip Hammond (8.2). Indeed, both Boris Johnson (10.5) and Amber Rudd (12) are seen as longer shots even though they are widely considered more qualified and more popular in the Tory party than the "Moggster".

This raises the question of whether it is worth laying (betting against) Mogg.The best laying odds are9.6 (10.4%), equivalent to betting on him not being leader at 1.12. If this were a completely risk-free bet, then the 11.8% return might be worth pursuing, but it isn't, as the example of Jeremy Corbyn proves. Even if you give him only a 3% chance of winning (which seems reasonable given the unpredictability of such contests), then the returns fall to an unattractive 7%.

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Another factor to take into account is the length of time before the bet is settled. While it's possible that May could be forced out in the next few months, there is a good chance she could make it to 2019, or even longer.

Assuming that it will be two years before a new leader arrives, you're looking at an annual return of just over 3%, which in my view is not worth hanging around for (I'd always advise you to aim for at least an annual return of 10% on each bet). So the best bet may be to sit this one out.

Instead, I'm going to suggest a bet on the Virginia Gubernatorial election. The Democrat candidate Ralph Northam is leading in the polls in a state where Hillary beat Trump by over 5%. After the global furore over the past few days' events in the US, I suggest that you take Paddy Power's 4/11 (73%) on the Democrat.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri